UK unemployment rose by 128,000 in the three months to October to 2.64 million, the highest level since 1994.
The Office for National Statistics (ONS) said the jobless rate was 8.3%, up from 7.9% in the previous quarter.
Youth unemployment rose to 1.027 million, the highest since records began in 1992, beating the previous record set only last month.
The number of people out of work and claiming Jobseeker’s Allowance rose by 3,000 to 1.6 million in November.
However, the rate of increase in the claimant count showed signs of slowing down.
The 3,000 rise was much less than the approximate 15,000 figure expected on average by economists.
Moreover, the ONS also revised down the October increase in the claimant count from the 5,300 reported last month to just 2,500.
‘Wasted lives’ The young continued to bear the brunt of the lack of jobs in the UK - a problem shared by many other countries.
The unemployment rate among 16 to 24-year-olds rose to 22% in the three months to October, up from 20.8% three months earlier.
Although this was the highest rate since formal records began in 1992, the ONS said it estimated that the rate had been higher in the mid-80s.
“Too many young lives are being wasted in the dole queue,” said Martina Milburn, chief executive of the Prince’s Trust youth charity.
“It is frightening to think that more than two-fifths of unemployed young people have been jobless for more than six months.
“Long-term unemployed young people are the most vulnerable, with many trapped in a vicious cycle of joblessness, anxiety and depression.”
Gloomy outlook The total number of people of all ages in employment fell by 63,000 compared with three months earlier, to 29.11 million.
That was largely driven by 67,000 job losses in the public sector. The private sector added just 5,000 jobs over the same period.
“In the last quarter for every 13 jobs lost in the public sector, just one was created in the private sector,” noted the shadow work and pension secretary, Liam Byrne.
The latest rise in joblessness fell more heavily on men, with a 83,000 increase in male unemployment, compared with 45,000 among women.
But rising unemployment has not discouraged women from seeking work - the percentage of 16 to 64-year-old women who are economically inactive fell to 29.1%, the lowest proportion since records began in 1971.
Long-term unemployment continued to rise in line with broader joblessness.
Those out of work 12 months or more rose to 868,000 from 849,000 three months earlier, and account for one in three of all unemployed.
The number of job vacancies continued to decline, down 8,000 to 455,000.
“This is another grim month for jobs, with private sector companies still reluctant to hire,” said Graeme Leach, chief economist at the Institute of Directors.
“The ongoing failure to resolve the euro crisis is likely to mean that unemployment rises still further over the winter. Many businesses are still watching and waiting.”
There are widespread expectations that the UK may be entering a recession, particularly if the eurozone debt crisis worsens in the coming months.
Sluggish wages Economists disagreed over how much weight to give the surprisingly small increase in the latest Jobseeker’s Allowance figure.
“The claimant count series has been heavily distorted by changes to lone parent benefit entitlement, which led to big increases through the middle of this year, and which was always going to wash out,” said Ross Walker, economist at Royal Bank of Scotland.
However, Brian Hilliard, economist at Societe Generale took the opposite view: “The number to focus on is the claimant count figures.
“It’s not enough to make people revise their forecasts but it’s a comforting feature when everything else is so gloomy.”
Over the summer, the number of claimants had been rising much more quickly than the official unemployment count, which is based on a survey.
But since July, the rise in the claimant count has steadily tapered off, whereas the number of unemployed has risen more quickly.
Meanwhile, wages continued to rise well below the rate of inflation. Excluding bonuses, average pay rose 1.8% from a year ago, and by just 0.1% from three months ago.
On Tuesday, the ONS reported that the rate of inflation - as measured by the Consumer Prices Index - was 4.8% in November, down from 5% a month earlier.
Those in work have been putting in more hours, with the average work week increasing to 31.6 hours, from 31.4 three months earlier.
Published by the BBC: 14 December 2011 Last updated at 16:31 See: http://www.bbc.co.uk/news/business-16175309